Santa Stimulus Strategy needed in MYEFO announcement
09 December 2019
The Mid Year Economic and Fiscal Outlook (MYEFO) update, to be delivered next Monday 16th December is the second for Treasurer Josh Frydenberg.
Conditions are poorer than last year, with the unemployment rate at 5.3per cent in October compared to 4.9 per cent in February and GDP growing at only 1.4 per cent in the year to end June, the slowest since 2009.
Australian Bureau of Statistics (ABS) data, indicates that the tax cuts announced in the April Budget haven’t trickled through to consumer spending, with the 2019 September quarter, showing retail sales fell by 0.1 per cent, with an annual growth rate of 2.5 per cent.
If the Government wants to deliver a Santa Stimulus then they need to review their plans and shift their focus from solely keeping the budget ‘in the black’.
BDO Tax Partner Mark Molesworth said, “If the Prime Minister and Treasurer want to deliver a Santa Stimulus this year via the tax system, then the Government should look to bring forward tax cuts that are planned for 2021/22 to next year and spend big on infrastructure.”
“The Treasurer should also be taking a look at incentivising businesses by providing additional deductions on significant expenditure that they make. Whether this is immediate additional deductions for the acquisition or installation of new plant / equipment - i.e. an investment allowance - or an additional deduction for wages paid to new non-associated hires, so long as total headcount increases over a benchmark time period.
“These would deliver practical measures that could help keep the economy in a surplus and provide a buffer from the economic headwinds.”